Better Way to Broker - Is your commercial real estate broker leaving up to 15% of savings on the table?


Research shows that commercial real estate agents and brokers have a dismal reputation, and it’s getting worse. The overriding assumption is that there’s an alignment of interests between the broker, as consultant, and you, the client/advisor.

Such misalignment of interests mostly arises from the way traditional brokers are compensated. As Steven D. Levitt and Stephen J. Dubner highlight in the popular 2006 book Freakonomics, commissions on sales and leases are dependent on price and the length of the lease. There’s no incentive for a broker to negotiate a better deal for you. In fact, the incentives all run in the opposite direction.

Traditional brokers share the following characteristics:

• They have a lack of training and skill development. Little professional training is available to the commercial real estate brokerage industry.

• They have access to data and knowledge, but are unwilling and unable to provide wise counsel, objective interpretation, or analysis.

• Most operate like “lone rangers” and are unwilling to work as a team.

• They refuse to bring in other brokers outside their own offices or geographical areas even if that’s where you’re looking for space.

• The compensation structure is such that many are driven to satisfy their own best interests, not yours.

• They actively resist anything that slows a deal. The discipline of creative problem solving, applying processes to help clarify options, engaged listening to find out what you really want, and proper due diligence takes time resulting in a delay the commission pay day.

Commercial real estate brokers should be extreme advocates working on your behalf. For those fed up with the state of today’s broker industry, we offer nine tips for hiring a better broker. It’s time to insist on a better way to broker and look for firms willing and able to offer this service to today’s business. It’s a better way to broker—and a better way to do business.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© John Culbertson, Cardinal Real Estate Partners, LLC | Attorney Advertising

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